Germany is introducing important changes to pension calculations from 2026 that will affect all employees, especially those with lower incomes. Pension points, which are the foundation of the entire German pension insurance system, are becoming more “expensive”, writes Fenix Magazin. In other words, workers will have to earn more than before for the same number of points, which means that many will receive a smaller pension in the future if their salary does not increase.

What are pension points and why are they important?

The amount of the German pension depends on the number of pension points that the insured person collects during their working life. Each point represents the ratio between your annual earnings and the average earnings in Germany in the same year. If someone has a salary equal to the national average, they receive one point. If they earn more, they receive proportionally more points, and if they earn less, they collect fewer.

These points are then added up and multiplied by the value of a pension point, which changes every year. The result of this calculation determines the amount of your pension. That is precisely why raising the threshold for earning one point has a major impact on the future income of millions of people.

From 2026, a higher amount is needed for the same point

The German federal government has decided to raise the threshold for earning a full pension point from 2026. Until now, an annual gross salary of 50,493 euros was required for one full point, and that amount will increase to 51,944 euros. This means that a worker will need to earn at least 4,329 euros gross per month to earn one full point.

In other words, if your salary stays the same, you will receive fewer points and therefore a smaller pension in the future. Although the increase seems moderate, the effect on long-term pension calculations can be significant.

The highest-paid employees, who earn more than 100,000 euros annually, can collect almost two points per year, while part-time workers or those in mini-job positions earn only a fraction of a point. In practice, this means that highly paid workers still do not receive a proportionally higher pension because there is an upper limit on the amount on which contributions are paid.

The contribution ceiling is also increasing

Along with the rise in the threshold for a pension point, the so-called contribution assessment ceiling is also rising, that is, the maximum amount on which pension contributions are calculated. In 2025, this limit was 96,600 euros per year, while from 2026 it will amount to 101,400 euros. This means that contributions are paid only up to that salary amount, while for everything above that, contributions are no longer paid and no additional points are earned.

For example, if someone earns 120,000 euros per year, contributions are paid only on the amount up to 101,400 euros. The rest of the income does not enter the pension system, which means that even the wealthiest workers have a limited number of points they can earn.

How exactly is the German pension calculated?

The German system uses a simple but precise formula that takes into account four elements: the number of pension points, the access factor, the current point value, and a factor that depends on the type of pension.

For example, a worker who collects 40 points during their career, retires with a regular pension, and has no special supplements or reductions, will receive the following calculation: 40 points times 1.0 times 40.79 euros, which gives a monthly gross pension of 1,631.60 euros.

So, each point is worth 40.79 euros, and that value is regularly adjusted every year on 1 July. The next increase is expected in July 2026, when both the point value and the total pension amounts will be adjusted again.

What does this mean for workers?

In practice, these changes mean that everyone with stagnant wages will slowly lose the value of their pension rights. If wages do not grow in line with the increase in the threshold for a pension point, the number of points collected will be lower, and the final pension will be smaller.

Workers with lower or middle incomes, as well as those who work part-time, will be particularly affected. Mini-job employees with an annual income of 7,236 euros earn only 0.14 points per year, which means that they would need decades of work or additional income to receive a pension at the average level.

Those who do not increase their salary will have a smaller pension

Although these changes are presented as a technical adjustment of the system, their consequence will be very concrete. If your salary does not grow at least at the same pace as the average in Germany, over time you will collect fewer and fewer points and your future pension will be lower.

In other words, from 2026 you will need a higher salary for the same pension. This is a clear message to everyone planning to stay in Germany long-term: without salary growth, there is no pension growth either.